TMI Blog1991 (1) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and noticed that stock declared by the appellants to the State Bank of India, Chandni Chowk, Delhi as on 25-2-1985 and stock taking report of the State Bank of India on 25-4-1985, when compared with the entries in their RG-1 Register on their respective dates it was revealed that items/quantity was not entered in the R.G. 1 Register to the extent goods worth Rs. 86,97,946.80. Accordingly, a show cause notice was issued calling upon the appellants to show cause why a penalty should not be imposed under Rule 173Q of the Central Excise Rules and why the duty payable on the above said goods is not to be demanded under Rule 9(2) of the Central Excise Rules for suppression of their production and clearance of goods without payment of Central Excise Duty for having contravened the provisions of the Central Excise Rules. In the reply to the show cause notice the appellants denied the clandestine manufacture and removal of Electric wires and cables and explained that the goods which had been pledged with the Bank were not manufactured by them. Inflated stock figures given in the statement and prepared as per requirements of the Bank to get more credit facility and furthermore the goods s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of disturbance of assassination of Prime Minister before passing the impugned order in the absence of any material evidence for such huge production. In support of his contention he cited the following decisions :- (i) 1983 (13) E.L.T. 1611 (S.C.), J.A. Naidu, Etc. v. State of Maharashtra. (ii) 1986 (26) E.L.T. 997 (Tri.) = 1987 (10) ECR 407 (CEGAT SB-D), M/s. Ebenezer Rubbers Limited v. Collector of Central Excise. (iii) 1986 (26) E.L.T. 333 (Tri.) = 1986 (9) ECR 323 (CEGAT NRB), M/s. Premier Packaging Pvt. Ltd. v. Collector of Central Excise, New Delhi. (iv) 1988 (33) E.L.T. 376 (Tribunal), Alwyn Industries Corporation v. Collector of Central Excise, New Delhi. (v) Order No. 114/84-NRB, M/s. Raja Radio Company, Bombay, v. Collector of Customs, Bombay. (vi) Order No. 563/86-NRB, M/s. Standard Cylinders (P) Ltd. v. Collector of Central Excise, New Delhi. Among the cases cited, particularly he submitted that Alwyn Industries Corporation v. Collector of Customs, Bombay [1988 (33) E.L.T. 376 (Tribunal)] in all fours is applicable to the present case wherein it was held that in the absence of proof of manufacture, the reliance only on the letters from the Bank w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 157.00 lakhs approximately. The sales further increased to Rs. 176.00 lakhs approximately in the year 1981-82 and to Rs. 225.00 lakhs in the year 1982-83, and to Rs. 230.00 lakhs in the year 1983-84. The target to be achieved in 1983-84 was around 300.00 lakhs but due to the Defendant No. 1 withholding the bill discounting facility, the plaintiffs suffered a set-back. 7. That in the execution of the project afore-referred, the mode is that on the finance which may be released by the defendant Bank, stocks and raw materials are purchased and from the same finished goods is manufactured. The orders from the State Electricity Boards and other purchasers are secured relying on the commitments of the Bank to keep provided the facility and finance as per the limits granted.........." When the above averments were brought to the notice of the appellants counsel Shri J.S. Aggarwal at the time of rehearing, he submitted that main dispute is in between the appellants and the Bank and whatever the inflated figures given or stated before any authority either for obtaining loan or in litigation cannot be taken note of at this stage and he drew our attention to para 12 of the plaint wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sues arise for our consideration :- (i) Whether the Department was justified in relying upon the stock reports available with the Bank as sufficient material to hold that appellants have clandestinely manufactured and cleared the goods without payment of duty? (ii) Whether averments made in the plaint before the Delhi High Court can be considered at this stage and the statement made by the appellant before the Court amounts to conclusive proof ? 9. Now, we shall consider and analyse the ratio of the decisions cited by the counsel for the appellants. (i) In the case of J.A. Naidu, Etc. Etc. v. Stale of Maharashtra [1983 (13) E.L.T. 1611], the Supreme Court while dealing with the Criminal appeal matter relating to contraband articles under the Customs Act, observed that it was for the prosecution to prove affirmatively that the contraband articles were in the conscious possession of accused and that the accused had received currency notes as claimed by the prosecution. To presume the accused guilty unless he proved innocence was not the correct approach to the appreciation of evidence. Nor the suspicion, however, grave can take the place of proof. Therefore, conviction based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facture of goods. The material relied upon by the Department is not sufficient to hold clandestine manufacture and removal of goods and to bring charge under Rules 9(2) and 173Q of the Central Excise Rules for levy of duty and penalty. In the absence of sufficient material of evidence the Department was not justified in levying duty and penalty for charge of clandestine manufacture and removal of goods. Hence, the Department fails on the first issue. 11. As regards second issue, the averments made in the plaint in the original suit filed by the appellants against State Bank of India before the Delhi High Court prima facie seems to be contrary to the stand taken by the appellants in the present case. But this aspect was noticed by the Bench at later stage and neither it was considered nor was it substantiated by the Adjudicating authority at the original instance. Further the case of the Department in charging clandestine manufacture and removal of goods was based on stock reports available with the Bank either as admitted by the party or taken by the Bank. These figures were supplied by the Bank due to dispute in between the Bank and the appellants. For the reasons given in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments. (iii) Even if it is presumed that their purchase records etc. were burnt in the fire, their bank statements etc. showing payment for purchases in the market, or any evidence from whom the goods were purchased could have been produced. But nothing has been done. (iv) On the other hand, statements of various responsible officers of the State Bank of India clearly show that they had not only verified the stocks as declared by the party (appellant herein) by physical verification but also that this is supported by an earlier letter dated 14-3-1985 of the party to the bank which says that they were holding physically goods worth Rs. 78.87 lakhs as on 28-2-1975. (v) When the Central Excise Officers wanted to verify the R.G.1 register on the very first day of their visit i.e. 10-7-1985 the registers were neither made available at the factory nor at their headoffice and the party produced registers only after a lapse of 5 days. (vi) Even if they had purchased any stocks from the market, the party in normal course would have taken permission from the department to bring in duty paid goods in the factory under Rule 51A of the Central Excise Rules, 1944 which was not done in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of stolen property, though the latter is only a presumption of fact. Thus the burden on the prosecution or the Department may be considerably lightened even by such presumption of fact arising in their favour. However, this does not mean that the special or peculiar knowledge of the person proceeded against will relieve the prosecution or the Department altogether of the burden of producing some evidence in respect of that fact in issue. It will only alleviate that burden to discharge which very slight evidence may suffice". Applying the aforesaid principles of law to the facts and circumstances of this case, it is apparent that the department had initially based its case on the two statements of stock furnished to the Bank by the appellants and the Bank s stock-taking report. A statement was recorded from Shri S.L. Nagpal, a Director of the appellant company. Although he has stated that the stock-position reports dated 25-2-1985 and 25-4-1985 are not correct because these were prepared by the bank authorities as per their convenience, it is significant to note, as rightly pointed out by the adjudicating authority, that not a whisper of purchase of stock of finished goods fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set of invoices were detected by the department from the appellant therein, but the Tribunal came to the conclusion that the set of invoices did not represent removal of unaccounted for goods on overall evidence. The facts and circumstances which weighed with the Tribunal in coming to that conclusion were: The dealers who are named in the invoices have denied receipt of the goods. There is no trace of the goods, nor any evidence that they were actually transported and received by these dealers ........The fact, however, remains that there are a set of invoices which the manufacturer has said, are meant only for showing to the octroi authorities. There is no evidence that the department has made any attempt to check with the octroi authorities whether the payments of the appellants have been as per invoices". On these findings, learned advocate for the appellants urges that here too there is no other corroborative evidence like octroi receipts that the unaccounted for goods have been removed clandestinely. The contention of the ld. advocate is without substance. In the instant case, the appellant has not disclosed the names of the purchasers of the goods at all. His case is that h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Bank or furnished to the Bank cannot be relied upon for the purpose of proving the contravention of Rule 9(1) of the Central Excise Rules. Each case has to be decided on the facts and circumstances available in it. 20. The story put up by the appellants that the statement furnished to the Bank on 25-2-1985 or the stock-taking report prepared by the Bank authorities on 25-4-1985 was with a view to getting higher loans from the Bank gets further demolished by appellants own admissions in a civil suit for damages filed by them against the Bank in Delhi High Court. This is a piece of evidence brought on record by the appellants themselves as Annexure D to the appeal. The ground taken in the appeal for relying on this evidence is as follows :- (1) Because there was no intelligence with the department that the appellants have been suppressing production. The case has been made against them on the basis of a complaint by the Bank, who made similar complaints to the other various Govt. departments and with whom litigation is going on in Delhi High Court (Annexure D) . Having themselves relied on their suit-plaint before the High Court, it cannot be said that the admission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction and sales. Not even once have they hinted at their activity being of purchasing wires and cables and then selling. Hence their stand before the lower authority of purchasing and selling wires and cables, which has already been found to be unbelievable in the facts and circumstances as available earlier, sounds completely hollow. The plaint presented by the appellants before Delhi High Court lends a strong assurance to the conclusion already reached by me. 23A. Reliance placed by the ld. advocate on Bush India Ltd. v. U.O.I. [1980 (6) E.L.T. 258 (Bom.)] is not at all relevant. In that case, order of a departmental authority impugned before the High Court of Bombay was sought to be defended by the department on a totally new ground. Here, the lower authority s order is sought to be given additional support by an evidence relied upon by the appellants themselves. 24. In the quasi-judicial proceedings before the departmental authorities, any evidence is admissible so long as the party charged is given an opportunity to rebut it. That has been amply done in this case. 25. In view of the foregoing discussion, I reject the appeal and confirm the impugned order. 26. I have ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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